Complaints made against the general insurance intermediary segment are on the rise, but how much of that is down to pure GI brokers?
The FSA’s H1 2012 complaints figures, published today, are unlikely to capture the popular imagination. But they make interesting reading nonetheless – particularly for insurance brokers.
The data was dominated by complaints made in respect of general insurance and pure protection products, with about 2.54 million cases received by the regulator out of a total of about 3.5 million across all financial sectors – more than 70%.
Among that portion, the main culprits were banks selling general insurance, largely payment protection insurance (PPI). About 2.23 million of the 2.54 million GI complaints related to PPI. No surprises there, as PPI has been the horror story of FSA and Financial Ombudsman Service complaints figures for a while.
Not just the banks
But the FSA data also revealed that the number of complaints against general insurance intermediaries spiked in the first half of 2012. The regulator logged 431,897 such cases, compared with 246,250 in the same period last year.
Of course, complaints figures by themselves don’t necessarily mean much, as any annoyed consumer can submit an ill-advised complaint that later gets dismissed. However, the FSA has also published the number of complaints upheld against firms.
GI intermediaries had 145,419 complaints upheld in H1 2012, 42% of the total made against them.
The good news is that the regulator upheld 63% of all general insurance complaints in the period across all firms, so GI intermediaries look good in comparison.
The bad news is that the number of complaints against GI intermediaries has been creeping up since 2009, when the FSA overhauled its complaints procedure. The total half-year complaints against GI intermediaries since 2009 tended to fall within the 42,000-66,000 bracket, with about 32%-35% upheld, until H1 2011 when complaints rose to 102,000, with 45% upheld. In H2 2011, GI brokers had 109,140 complaints made against them, with 40% upheld.
The FSA figures on redress paid to consumers are also jaw-droppingly bad for brokers. General insurance intermediaries have paid £145.9m to consumers from 1 August 2009, when the FSA rejigged its complaints procedure. This is second only to banks and building societies, which have paid £2.86bn, much of it relating to mis-sold PPI.
A lot of the fault won’t come from pure general insurance brokers, as the FSA counts about 6,000 firms in the ‘general insurance intermediary’ category, many of which sell insurance as a secondary service. Unfortunately, the FSA complaint statistics do not distinguish between the two, so the true proportion of blame is uncertain.
Nevertheless, these statistics do beg two questions for brokers: what is the truth behind these figures, and will this worrying trend of rising complaints continue?